TRAP: The Real Adviser Podcast

51 - Much Ado About Nothing

• Alan Smith; Andy Hart; Carl Widger; Nick Lincoln

Share episode

In this latest pile of TRAP, the Trap Pack discuss

  • Topical issues, including FPSB Ireland making great strides, Truflation, the primacy of equities, CISI Chartered Status, Verve Incubator, Hargreaves Lansdown delisting, HUM London nearly sold out
  • Meat and Potatoes: Much Ado About Nothing
  • Questions posted by our beloved TRAPist https://twitter.com/JoinedUpJill
  • Culture Corner

Links referred to in the show:

============================
Take part in the conversation! We want YOU to suggest topics and questions you’d like the Trap Pack to answer. The best way to do this is to ask them here.

Help us to help you! The more followers we have, the more we can do stuff going forward. So please:

Unknown:

Music, welcome to the real advisor podcast, T, R, A, P, trap. Please follow us and join in the conversation on Twitter at advisor podcast, where you can suggest ideas and themes you'd like the trap team to discuss. Also remember to like and subscribe to our YouTube channel and leave a six out of five star review on iTunes. Doing all this really, really helps us, which means we can do more to help you. Now, let's head over to the studio for the latest pile of trap.

Nick Lincoln:

Yes, indeed, dear TRAPPIST, welcome back to what many people are calling episode 51 of the real advisor podcast, T, O, A, P, Trapp my name is Lincoln, joining me as ever in the digital studio of doom are the three other Horsemen of the Apocalypse. Alan, the storyteller, Smith and the ultra heart and Carl the voice de la Bucha widget, gentlemen, we have a show packed full of apps, absolutely nothing. So let's start unpacking it straight away with some high energy review read or reads. Mr. Hart, the floor is yours.

Andy Hart:

Thank you, boss. Okay, my first review is from Jack farmer 98 entitled, wealth of knowledge. Five stars. I'm 25 years of years old, and I've been advising for a year and a half now with a great company that does full fat financial planning. In Nick's words, I love the podcast, not just because of the banter between you all, but because the nuggets of wisdom you can take away. It helps me a lot, because it confirms what I'm doing. I'm doing the right things. This is the best financial planning, personal finance podcast out there that you can listen to, and if you want to improve your clients lives and your own too. Thanks, guys. Next up, there's two today, Nick, just to stress you out, this is from love adopt. Sounds very odd. Refreshing advisor. Content, five stars as an advisor in Singapore. Interesting. The podcast provides extremely refreshing content compared to the normal, backwards looking industry subject matters, I've passed on to other advisors as an example of a better way to give financial planning advice at expat expat planner. Back to you. Great

Nick Lincoln:

stuff. Great stuff. Thanks trackers for the reviews. We do love them. Please do keep them coming in. Please do make sure they are a six out of five.

Alan Smith:

It's great that we they have these international listeners from all sorts of places. You know, you go and chartable. You can see all these we pop up in all the weirdest and wonderful places. Remember, we were number one in Mauritius, the whole podcast chart. Yeah, I've noticed recently, again, random Namibia. What's that about? Is that Lunch Club Dirk, going on his holidays

Unknown:

or something, download. That's

Andy Hart:

the first thing you do. And you wake up in the morning and you check charitable from your bed,

Alan Smith:

yeah, something like that. Okay, okay. What's next? Good

Nick Lincoln:

stuff. We have global reach. Global reach. Let's leave it at that. Okay, let's, let's put a timestamp on episode 50 I'm quite happy with my five, my one today. They're actually quite organized. Let's crack on and put a timestamp on episode 51 with some topical tidbit, it's supposed to be the summer, right? The the dog days of summer, not much going on, but there's loads going on in this thing of ours and outside of this thing of ours, not a little bit great, but we'll try and make it great for you, dear TRAPPIST, and bring some levity into your life, right? This is forced levity, so bear with me. I'm doing it through gritty okay. First topical tidbit, something of yours is shrinking. Alan,

Alan Smith:

yeah, I don't think it's just mine. It's there was a lot of press, a lot of reports in the trade press of the last couple of weeks around the fact that, yeah, as we've spoken in the last episode, we've just gone through the first anniversary of this piece of legislation called consumer duty. It's caused a lot of people in our sector to sort of sharpen their acts up, focus on, you know, delivering services to clients, you know, up their compliance and regulatory game, all of which are, you know, sound business things, and all of which come at a cost. And there was a several reports about firms, and I didn't really like the word. It seems inhumane, but talking about culling, culling their client bank, there's a thing in citywide, new model, advisor, everything in money marketing. And yes, firms were saying, look, we've got rid of 20% of our client bank in the last 12 months, which, you know, found quite hard hitting, I suppose, quite brutal. Makes me think, you know, what were you doing before that allowed you to deal with these clients, but now you can't. And I think I feel, I feel a bit, I mean, look, it's a big subject. You can't necessarily deal with everyone. And there's a question of it, does everyone out there in the universe actually need advice? We tend to, what's your phrase Andy, we tend to deal with, you know, more complex problems. They answer expensive financial questions. Yeah, not everyone's got super. Expensive financial questions that a lot of people, I guess, out there, the general public, who probably maybe the, you know, they've got auto enrollment, they've got relatively straightforward requirements. You can have, you know, life assurance and protection is still available on a commission type model. Anyway, I just thought, you know, we'd raise this if the industry is changing something that there was a It did refer to a survey that lancat did, which said, couple of years ago, 11% of the UK population paid for financial advice. That number has now shrunk to 9% of the UK population. So less people is this kind of unintended consequences. Talk about the advice gap, less people are actually paying for and receiving advice around their personal finances, and a lot of the blame has been put at the door of consumer duty and the sort of compounded effects of additional requirements over the years. Any thoughts,

Andy Hart:

I think you covered the bulk of it, but yeah, it is a long term trend in terms of the advice gap and all the different legislations that come out at different times. Sort of add to this. Yeah, they're also in the article, it mentions that the minimum asset level now is increased by 12% from last year. The minimum asset level, they're saying is 214,000 from the study that they conducted. That's the minimum

Alan Smith:

asset level that any average advisor, average, yeah, take take on. What are the one of the firms in the ensemble set had a 200,000 minimum. They've now moved it to 500,000 I think that's quite a material. Quite material, you know, not. Hence regular money, yeah, hence regulated financial advice is a luxury item. You

Andy Hart:

know, there's obviously cheap online DOI platforms. That's where all these people that don't get advice will end up, which is not a bad thing, let's say. But when they build up the assets to a certain level, then they might need to seek help from someone like ourselves. But, yeah, it's a long term trend.

Nick Lincoln:

Okay, let's crack on, because we've got loads of stuff, and last the last episode was one and three quarter hours. I think we're still recovering from that. Okay? Ultra Yes, go on, surprise us with another tale of these volatility protecting funds not doing what they're supposed to do.

Andy Hart:

Yeah, I think, you know, it says what it says on the tin. As it were, funds offering protection from volatility failed to deliver in the sell off. You know, whenever there's protection of guarantees, it's red flags from me. And again, these funds have been, you know, created by marketing departments to sell to investing illiterates like they fly off the shelf, and at the time they're meant to do what they were sold to do they don't. So there's a link to the ft.com article. Any comments?

Alan Smith:

Yeah, well, these are covered. What

Andy Hart:

do they call it covered? Call

Alan Smith:

covered billions flow into. I hadn't seen the article and I read it. When you send the link around, billions flow into covered. Call ETFs again. I mean, we'll, this will never stop. No, this will always so what this is, is a kind of mechanistic financial structure to deal with what is fundamentally a human behavior problem, right? Yeah, what it is, and volatility is a feature, not a bug, where they're also trying to, yeah, so we want to dampen volatility, so we create these complex instruments. And it does, I can't see the notes, but it does say, well, it's billions. Create a need, create an ETF that employs these strategies, which are designed to dampen down volatility. And guess what? Just when you needed it, it failed. So the it's quite a good article, actually, in the FT, because it shows the underperformed, the SB example, whilst the markets were racing away, and they fell pretty much just as far and fast as the markets in the recent short term correction further. So they've done exactly the opposite. Well, they've just done they've added no value whatsoever, but they are esthetically attractive to

Carl Widger:

the guard rails didn't work, not just didn't

Alan Smith:

work. And how often does this happen? Yeah, all the time.

Nick Lincoln:

Yeah, absolute return funds. You know, it's just garbage. But as I say, it's to

Alan Smith:

deal with the behavioral problem, and that's, this is the biggest thing about it all, is that people want, I don't know, mental security, safety, want to relax, want to do it. And there's, you know, there's other ways of achieving it, because there is. There's little or no past track record of these things ever really working consistently, but people still pile into them. Yeah,

Nick Lincoln:

agree. Okay, have we done that one? Watch FPSB. What is it? Tell us about it.

Carl Widger:

So the financial planning standards board in Ireland, I've mentioned them before they gathered a bunch of firm principles earlier on this year, or was this? Yeah, I think it was earlier on this year anyway, led by Emer Kirk, and they've come out with their five year strategic plan, and they're doing some surveys and that kind of stuff. Anyway, the whole premise of this is that they're trying. To raise awareness of real financial planning. So can only be a good thing slowly, slowly, slowly, but surely, we are seeing it become, you know, more mainstream here in Ireland. So, yeah, so look me rambling on here, and Emer Kirk's work in the FPSB and some of the other people in the Irish ideas exchange. It's, it's, it's working. We have a job to do, right? But long term, what we'll get there.

Andy Hart:

What other factors do you think of it play here called Do you think it's younger clients seeking that? Do you think is the tech influence? Do you think it's what else is, because the FSB is doing, because they're, like, screaming into an empty room, if that makes sense,

Carl Widger:

no, yeah, but I'm not sure they are right, because so obviously they're, they're in charge of delivering the CFP modules and qualifications. And it seems to be, you know, that everybody the Q, F, A is the most basic qualification that you can get to operate in our in our business. Um, and a lot of the younger folk are doing the CFP, and the CFP is all around. What does real financial planning do? So a lot of the younger folk are, you know, in banks or firms whereby it's product selling and blah, blah, blah, and they're seeing the light, and I think they're probably pushing it as well. But there are, there are lots of clients who kind of are beginning to get what financial planning is. And I liked your thing earlier on. And you know that not everybody probably does need real financial planning, you know, but you get to a certain level, and by God, if you don't have it, you're gonna be in trouble at some stage, because I'll talk about the the upcoming budget and some changes. I'd hate to be someone doing a DIY. You'll end up with big tax bills if you're trying to do a

Andy Hart:

so many there's so many land mines that people don't see. But often

Alan Smith:

this can be a self perpetuating thing if you actually deliver this stuff. And obviously, as we know, CFP is a global license originally come out the US, but it's now global as CFPs, all over the world. And as as I understand it, this organization just talked about they're the upholders of the standards Correct. CFP, yeah. So, so this, so it's a kind of it's a global thing. And obviously, other than that, on a country by country basis, there'll be a lot of different differences, but this is a global standard, and as we've all experienced over the years, once you learn this stuff, now you don't necessarily need to have the CFP license to do it, that's for sure, but it is one way of demonstrating that you do know what you're talking about, particularly someone who's early on in their career, but once you experience the client's reaction, you don't want to never not do it, because you know the difference, difference between sitting with a couple running through a detailed financial plan that you've created yourself, or CO created with them, and if you've got the framework through the CFP to learn to do it, the feedback you get 99.9% of the time is just so good you never don't want to do it. So I think you may be going through a tipping point there in Ireland, just to say, and you know, those people, then, yes, the other mates, and as you see that, I the Irish ideas exchange and so on. It becomes a self fulfilling thing. Yeah,

Carl Widger:

there are six modules in the CFP, and the final one, and you have to do it last, so you can do the others in whatever order you want. Is financial planning, right? So everybody in Metis, who's done the CFP have all went absolute easy peasy. It's what we do all day, every day. But I do know some of the people from, say, the banks or whatever, who aren't doing for this is like, this is like looking at Latin and trying to decipher it. It's like, holy shit. What is this all about? Boss, and here's the big thing. When they go through it, they go, but sure, why wouldn't everyone do this? Everyone needs this. And then they go, oh, there are actually firms who do do this. And then they decide on what financial products. So people are seeing the light. I'm very optimistic as to the future here. It's going to be a slow burn, for sure, but I know that all of the firms that I'm talking to who are doing financial planning are absolutely knocking it out at the park at the moment. And I do also know that none of the people who are doing financial planning we will be touching on this later on, are getting any phone calls from their clients about a perceived market decline, so they're doing their jobs properly anyway. Spoken too much about it, but I'd like to say well done. Emer Kirk and her team at the FPSB,

Nick Lincoln:

good, good. Very encouraging, very encouraging. Okay, so this is the time of year when I get my regulatory invoice from the FCA, but the FSCS levy included in that and and ultra storage. I don't know about you, when you get yours, but seems to be the continuing fall in regulatory fees is ongoing. My, I'm just looking at the figures. My, my my levy fee now is 42% down on what it was four years ago, and obviously turnover has gone up between now and then. So that's just a. Pretty much unabated, good news. So long way that continue. You guys experienced your levy invoices recently. Yeah, we have similar

Alan Smith:

orders, similar maybe not quite as much as that declined for us, but yeah, significant material difference. Now, part of that is because it peaked in a crazy rate when the FSCS, and there was all sorts of scandals that had to be covered for so there was a time, a few years, maybe three,

Nick Lincoln:

still, wasn't it British? Still? Yeah, London

Alan Smith:

and capital London, if

Nick Lincoln:

you let me do your red data returns, you two, your fees will drop off. It's just amazing.

Alan Smith:

God forbid. But no, yeah, it is worthwhile. Good point. Nick flagging up a good news story that's, yeah, very good relating back to the conversation a minute ago. You know, advisors culling their clients, but And yet, most of them would have experienced material reductions in their regulative regulatory fees and costs. So interesting. Maybe it is a dividend. Maybe we will benefit from ongoing increasing standards. Long may it continue.

Nick Lincoln:

Okay, storytellers, sticking with you for this true flation.

Alan Smith:

Yeah, this is such. This is something that really it, it's it commands more of my attention than it should do. I'm going to mention that a bit later on as well in the culture corner, I think fundamentally, we all agree that clients and ourselves and the people we advise, the biggest challenge is not beating the market. We're not trying to beat the market all the time. Let the vast majority the investment industry will have us believe, massive marketing industry with an investment management bit tagged on, it doesn't. You don't need to beat the market. You need to capture market returns, but what you need to do is to preserve your purchasing power. In real terms, the cost of your cost of living for every human being, the way things seem to work in the western economies is the cost of living goes up every year and but no, and we did talk about this briefly last time, didn't we about inflation? I mentioned getting a personal inflation rate, working out what your own individual inflation because is depending how you consume or what you spend your money on, etc. But I came across a website recently called trueflation, which I think is a US based company, but it does have inflation rates for all sorts of places around the world, including the UK. They're quoted, and they are of the opinion that their data is more accurate, and you can put in certain information about your own circumstances, but they're quoting, they're quoting an inflation rate of 37% three 730, 7% since 2020 so in those four years, the trueflation return inflation rate has been 37% so couple of points about that one. If you plug your data into the Bank of England and get a CPI figure, they say 23% so back to this. You know who's whose number is correct. And secondly. So what that means is, unless your wealth, assets, investment, pension or whatever else, has increased by more than 30% 37% net of all fees, costs and everything else. In the last four years, you've gone backwards. You've lost purchasing power in real terms. Brings us back to all these questions, you know, keeping money in cash because you were getting 5% in cash accounts, you know, holding a high proportion in bonds. It's kind of just a repetition of the stuff that we tend to say, but that's quite hard hitting. I just thought when I said, when I read that 37% over the last four years, if you haven't achieved that, you've lost money.

Carl Widger:

Interesting. I loved Alan in the last episode, the personal inflation rate, and this is kind of linked to it, I suppose. I actually said it to a client after our last episode, and I said, I claimed it. And I went, I

Andy Hart:

was gonna say, I like to steal an idea. Did you come not

Carl Widger:

like him? I like to call that your personal inflation rate. And the client said to me, you took that from Alan Smith. I listened to the podcast, really. So, yeah, so remember you boys said, Don't be stupid. No clients will ever listen to that. Yeah, they do

Unknown:

hilarious. Busted,

Carl Widger:

positive. It would have been fine if I didn't claim it myself, but when I said I like to call it yes.

Alan Smith:

But is. But nevertheless, do you think that's a that's interesting? One about the quoted rates of inflation that government, or whoever is who give us, and it can't be accurate because it's a broad brush with a basket of goods and services that you may or may not consume. And secondly, that even then. Some sort of independent think tank has given a number which is about half again higher than what the official rates are in

Nick Lincoln:

terms of our day job. This is so important, and this is why I think if you, if you're using the government target of two and a half percent as your assumed inflation rate in your cash flow models, you need to have a quiet word with yourself. I mean, CPI is just bullshit. RPI is bad enough. A CPI is just rubbish. Assumes you do all your shopping at Primark and you eat, you know, you eat off food bought at littles. It's nonsense. So I, you know, my assume graphic is 4% which is one of the percent over, remember the government target, and 4% is obviously light compared to what it's been in the in the last 445, years or so, so

Andy Hart:

in your financial forecast, it's the relationship between the numbers more important. But I know you mean just to, yeah, real

Nick Lincoln:

return on growth returns about two to 3% depending on your asset allocation. But, but yeah, you just, you need to have a strong understanding of inflation. You know, said holidays tend to go up, I think more than just CPI, school fees, that kind of stuff. Yeah, gym memberships are things that the aspirational things that perhaps the people that we help service are more likely to have, do not go up by bloody CPI or anything close and haven't done for years. Forget

Carl Widger:

the recent splurge, tonight's closest good

Alan Smith:

yeah, the cost goes up, but just your lived experience. Anyone who goes out and you know, allies, lunch, Alan,

Nick Lincoln:

red flag, mate, all experience is lived. Do not use that phrase ever

Alan Smith:

again. That's that on the bad list as well.

Andy Hart:

Just get them all out now. Mate, he's like, Yeah, lived experience inflation is the real financial dragon that we're trying to fight for our clients. And again, you know,

Alan Smith:

generally, isn't this the point we keep coming real, we keep getting sort of shot down in flames or a bit and we talk about capacity for lost capacity. Scholars,

Unknown:

look, you

Alan Smith:

will be your life won't be as enriched and everything else in the future as it is today, because of this thing called inflation, and don't necessarily believe all you read about the published data. So I just think we can all have better quality, like you did the other day. Carl stealing my idea, better quality conversations with clients. Why would you not earn a side of caution? Assume that 2% is not a reasonable rate to expect. Why would you not aim for an investment strategy that's allowed to significantly, based on 120 years of data, outperform any prevailing rate of inflation?

Nick Lincoln:

Okay, point. Well, the bigger question that the TRAPPIST are asking out there is, who did Alan Smith, Sten it from? But we'll come back to that, maybe in a future episode. Let's have a look. Watch budget. Oh my god, budget. Don't go on.

Carl Widger:

Yeah, I just said I mentioned this. So budget is coming up first week in October here, and they're doing what they normally do. They're putting it all out there just to test the water. So the standard fund threshold for pensions is likely to be increased exit tax. Unfortunately, they've put it out there and they're saying, Ah, probably not so that we would discrepancy. I mentioned that before, but the interesting one for me was the inheritance tax threshold. So earlier on this year, there was whispers amongst the some well connected people in the tax community that the inheritance tax thresholds were going to be reduced quite significantly, which led to a lot of people doing a lot of things that to try and get ahead of it. And obviously, right when they said, when they sent that out, people were going bananas. So the politicians said, right, fact that, lads, we can't do that. We need to go the other way. So now all of the media stuff that's out there about inheritance tax is that the thresholds are, in fact, going to be increased anyway. Point is, they just test the water with this stuff. We know that. So let's see what transpires. But my point that I just made earlier on, I'd hate to be a DOI investor who's at the max in their pension fund, who's looking to withdraw money from their portfolio, who's looking to pass money onto their estate. You can't possibly do it yourself. Nick

Andy Hart:

and Alan, do you remember when it was muted that the pension was going to be able to hold any asset in the UK, like cars, residential, right? Or less, the world went insane for about three months, nuts, and then they were, you know what? No, we're just scrapping all of that

Unknown:

Carnage is gonna be caused

Nick Lincoln:

in the captain of shit ideas. That was a really shit idea. Okay,

Alan Smith:

this is, this is a good point. Obviously, we are facing a budget in the UK when September, coming up quite soon, ish, it's gonna be big. And, yeah, that this stuff has been said, it's interesting, isn't it? The obviously, we've got a new government in place here, so they can test things out early off.

Carl Widger:

I think we'll move along Alan swiftly. Yeah, we're only protecting you here,

Alan Smith:

no, but just saying, the one you mentioned inheritance tax, that's, that's the one every client you speak to, they're just, they just dislike it. You know, they can live with income tax capital gains up to a point. Inheritance Tax just seems to generate quite a lot of emotion. So I think that, I think the

Andy Hart:

marginal rate of inheritance tax in the UK is not that high. You know, when I sit down with the clients that's got a few million quid and they're going to be paying three for whatever it works out to be, and I say, look, the overall marginal rate now is like 12% 40 is the number that gets applied against, but the overall marginal rate is like 12, whatever the number is, and it just de stresses them. And I think, well, that's, that's quite fair. Yeah, the marginal is low, and

Carl Widger:

it's never quite because of the thresholds. Yeah, it

Andy Hart:

works out. You know, you can have like, 3 million quid and only pay on a note, uh, 14% yeah, overall, it's 40 on the number that gets applied to. But the marginal

Nick Lincoln:

rate is attack. It's a tax on stuff that's already been taxed. Rates with people. That's, that's, that's, that's the mental

Carl Widger:

our rate used to be 20% now is 33 so like

Andy Hart:

ours is 40 on on, yeah, the amount that gets caught, I get you, but we always, I always, quote The marginal overall rate with client. When clients got large pension pots, it can reduce down to about 12 or 11% and then they go, not bothered about it. Let's just grow the wealth paid.

Carl Widger:

It's a great reframe. And to all my clients, very big I'll probably use it.

Andy Hart:

It's very good Carl, very good reframing. Marginal overall rate, massive, massive stress. I love it. We're trying to remove their financial anxiety. They come into the meeting, go, 40% 40% 40% and you wait and you go, it's 12.5% and they go, nobody's ever told me. That's how it works. Yeah. Get it. Get it. Playing

Unknown:

Andy the ultra crap. And Darren Andy, he knows about everything, and he can't be told anything. His name is Andrew Hart, and drew Hart, Andrew,

Nick Lincoln:

right. So what are we at now? Ah, yes. So moneyvator, money voter, really good site, moneyvator.com all these things we're talking about, TRAPPIST, there will be links in the so called show notes, but I would highly recommend you sign up for the money but moneyvator.com related to email comes out twice, two or three times a week. It's UK focus, which is really refreshing and nice. And they're always putting out great stuff. And yes, so in this kind of world of tool mark that we're apparently in at the moment, everything's going on. A lot of it isn't particularly pleasant. You'd think gold would be the asset class that would stand out. And money later, put together a very good little, little piece about us, asset classes, both in dollars and and we value to Sterling. Over the last 1020 1590, and 124 years, we're going back to 1900 in the longest instance, just how equities have fared against government bonds, gold, commodities and cash. And over all those time periods, 10 years, 2015, 90, 124 gold lags equities by in in some time spans by a considerable margin, the longest margin of all, 124 years. So imagine 1900 we got King Edward and coming down the barrel at you, coming down the tunnel. You don't even know it. A two world wars, a Great Depression, Bay of Pigs and near nuclear war in 1961 high inflation in the 1970s and 1980s gold crisis, everything since then, everything we've had in this decade, airplanes, meeting, tour buildings, the on ripples from that s, p, has returned 7% gold point 7% in real terms, Nick, 1900 No, I was in 1903

Carl Widger:

and I just, you're looking good. Can I just counter that? I want to read a quote to you. We currently hold, we know blah blah, we also hold gold, which has done very well this year despite lower inflation as central banks increase their holdings. After being very underweight bonds for several years, we rebuilt that allocation last year. Blah blah blah. So what about gold this year? Nick

Alan Smith:

is this? Is this from the yes it's Norway monthly, weekly investment.

Carl Widger:

This is for, this is my meat and potatoes. I actually did some research this time, guys. Oh, nice. This is, this is a six experts telling us what we should do in our portfolios. And I'm going to get in big trouble when people realize who this expert is. But anyway,

Alan Smith:

keep your powder dry.

Nick Lincoln:

We'll talk about it, yeah, just just the long the long term primacy of equities, basically over most serious long term period just knocks everything else into a into a cocked hand. You know, the ninth the 20th century was not a barrel of laugh, and the 21st century has had its moments already,

Carl Widger:

yeah, but since last month, since last. Monday, gold has been a good idea. Yeah, fantastic.

Andy Hart:

Well, I think that's,

Alan Smith:

I think that's the point, isn't it?

Nick Lincoln:

I think, I think this evening, it could shine for little period before rolling back in the morning, lunchtime, probably oscillate back the other way. We'll get a second out of counter rotationals, right? Let's crack on.

Alan Smith:

We were talking about, we were talking earlier on, about you talked about the CFP Carl and as a qualification and a sort of study mechanism, I just saw this. I mean, he won't, you won't mind me sharing it. Nick. Nick was invited to become a Chartered Financial Planner, wealth manager, chartered something as a consequence of being at the job for a few years. That's the point. It's just got an interesting development that we've now got. There was a time when, when no one had this thing called a chartered now, Carl, I think you're familiar. I don't know if you have it in Ireland,

Carl Widger:

but all I remember from this group was proudly on chart, yep. Probably

Alan Smith:

Uncharted, exactly. But you know, in other in other professions, so notably accountants, a chartered accountant, you it tends to be one of the more qualified, better as opposed to some of the other options, chartered surveyor, Chartered Engineer. It is a badger, qualities generally perceived by the public and those who didn't know too much about it, to be chartered. So what I do know is some people have done a lot of work to get to get charted, and people still, are still doing it and putting a lot of time and effort and energy into getting qualified. But the and I'm just throwing it out there, experience should go back. Do

Andy Hart:

you not think experience should count for a big chunk towards it?

Alan Smith:

So I don't know what the metric is. How many years do you have to? So, Nick, do you want to? Nick has been invited to become a Chartered Financial Planner without doing any exams.

Andy Hart:

You didn't want to, if

Nick Lincoln:

that's if that's truly what it was, I would, I'd be happy for it to give it to me. But you know, the CISO, the CFP, as was, that you're certified under their route, aren't you? You're not chartered. So this is a news title they brought in. You are chartered if you go down the CII route. So I think it's just a cis I having a little bit of trolling of the PFS and the CII.

Alan Smith:

They've now got this word chartered. I believe they've got the CFP. CFP still that's but they don't own that CFP, as we've already talked about as a global I think us. I think there is the FSB, whatever you call them, that

Andy Hart:

my side did have the CFP and the CII have the chartered. I thought you passed

Nick Lincoln:

exams with this financial planner. I think my financial planner. So this thing that's correct,

Alan Smith:

no, but no, but you can also be a chartered wealth manager. Yeah, that is a new, invented thing. Yes, I

Andy Hart:

think that's a new thing that's come along via the CISI. But the certified, it's called grandfather. It's

Nick Lincoln:

dull, isn't it?

Unknown:

It's kind

Alan Smith:

of, yeah, so Nick, are you going to do it?

Nick Lincoln:

You're going to become a child. He

Alan Smith:

doesn't want to

Andy Hart:

pay non drive quid, so you can't use this run over burning coals to get that designation and Nick, it's

Nick Lincoln:

not the designation. It's not certified. It's something

Alan Smith:

Nick is chartered wealth manager, something like that. Are you still proud? Nick? Let's

Andy Hart:

get that on record,

Nick Lincoln:

right? Let's move on. So reason why I would do it, and then come then I think about right watch, mind boggling you in many ways, and also Irish banks.

Carl Widger:

Bank of Ireland, AIB, both reported their profits for the half year. Remarkable coincidence, they both reported 1.1 billion in profits. Remarkable coincidence, both CEOs come out and bemoaned the pay caps for bankers. You can't make more than 500 grand. That was a thing that was brought in after the Irish people had to bail out these two banks, and both bemoaned the fact that they're, you know, it's the pillar banks paying the bank levy. Just remarkable coincidence that all these things happened.

Andy Hart:

The CEO salary cap to 500k call,

Carl Widger:

I think so, yeah, and he might be allowed to have some bonus or whatever. But anyway, it's 500 grand. It's like,

Nick Lincoln:

Is that why you haven't gone into

Andy Hart:

banking? He's not chalter. He couldn't take the page.

Carl Widger:

Bank of Ireland showed up. Bank of Ireland has 80 billion on deposit, and Mr. O'Grady, who leads the Bank of Ireland, admitted the bank was outperforming its targets on returns, partly because of the slow rate of movement of deposits into higher yielding accounts, which they have. And he then went on to say that, you know, they're hoping that their wealth management arm could capture some of these deposits. I just cannot understand. And why people aren't looking for real financial planning from real financial planning firms. Um, 80 billion on deposit, the mind, bargain news,

Andy Hart:

Carl, some of it will trickle into the independent sector. Yeah.

Carl Widger:

Like, look the revenues. Have some great have great TV ad at the moment that you know the Irish, the the Irish bankers don't like them, and it's a funny ad, but Revolut are coming for them. And come on, come on, revolution. Come on, everybody else. We need competition. Competition is where all the pencils will be sharpened and the consumers will gain,

Alan Smith:

sure. But this is this. There's a real recurring theme all the time, because if you can get, what rate of return can you get in these bank accounts? Now still pretty decent on the other headline, compared to the last 15 years when it was 035,

Carl Widger:

I think his point is that their net interest, what's the phrase margin? Anyway, their margin? It's not margin. But anyway, yeah, so most of this money, the 80 billion, is on zero. Are very low.

Alan Smith:

People haven't moved it up to a higher rate. It's just literally, which is just financial leverage.

Unknown:

As a result,

Carl Widger:

their money, you know,

Alan Smith:

they don't they obviously, they don't reach out to their clients to say, do you know you can move it to another account? You get a better rate of return. I

Andy Hart:

think the typical, the typical model, okay, they're

Carl Widger:

putting them there's putting them in touch now with their wealth, their wealth management divisions, they are aggressively, yeah, to try and make even more money for insurance than they already are.

Nick Lincoln:

Okay. Okay, okay, guys, we've got about seven more points to get through in topical tidbits. So we're nearly 37 minutes in. Okay? Quickly. Storyteller, verve,

Alan Smith:

yeah, just, just want to do a quick one. Haley from Verve reached out to me this week and asked if we'd be kind enough to remind everyone we mentioned this before. You never got they've got this advisor incubator program. It's the last cohort is is just being launched or closed in the next couple of weeks. Go online. I've posted the link. It looks amazing. It looks really good. Anyone who is either thinking of starting their own advice business, and or is maybe a one man, one woman band who wants to consider growing, scaling and maybe hiring a few people, and there's just so much available. And guess what? It's free. It is free that so much structure, support, advice, consultancy, all that sort of stuff. So it's the last one of the year. Latest cohort. If you are remotely in that zone, either early days, we'd like to start your own business or running a small company, and you'd like to consider growing the company. Get in touch with Hayley and the team at verve. Check out the link in the show notes. Thank you.

Nick Lincoln:

Okay, very good staff.

Andy Hart:

Ultra Okay, so this is Carl Walker, who's an English football player. He's going through a custody issue with, let's say his previous partner. It's basically like a divorce, but they weren't ever married. And it's quite an unusual case, because the judges decided to make all of the information public, and there's a link in the show notes, and it's quite a sort of easy document to read anyway. So it lays out Carl Walker's financial position. It lays out what the mother of the children has asked for, and the sort of settlement has potentially been agreed. It's quite staggering reading most all of the time this information is private and is not made public, but the judge in this case decided to make it public, so it's a huge insight into, obviously, his financial position, his earnings, his assets. So there's a whole host of interesting information there for financial planners to get their nosy little eyes into. And yeah, I'm assuming you guys are totally not interested in

Nick Lincoln:

this story. Correct?

Alan Smith:

Can I ask why? Why does a judge believe this is in the public interest?

Andy Hart:

The reason why is because the mother, I think it's lauren Goodman or something, she was claiming to the judge she wants this to be private, but then I believe she was feeding information to the press anyway. So the judge was my way, if you're telling me to keep this private, but then you know you're doing this on the side. That's not the right way to do it. So the judge decided to make it public. It's a

Alan Smith:

harsh This is obviously a highly

Andy Hart:

personal event. I think the judge decided that it might be in Carl Walker's interest to make it public. She was disclosing all his earnings and everything, all his I mean, it was almost out there anyway, with speculation and publicly. So what

Alan Smith:

have you read? I haven't seen it. Have you read it? What? Yeah, he's

Andy Hart:

out. Can you share. It with us his assets. Save this for

Nick Lincoln:

your separate, divorcing footballers podcast,

Andy Hart:

total 26 million. It's split down. But just the way the judge talks about his assets and money, it's a really interesting read. So do check out if you interested in this stuff. Yeah, there's, I mean, obviously she was asking for a lot of money per month, and obviously, like 12 and a half grand a month, net, which is 25,000 and then her side was saying, obviously, this seems like a real significant amount of money for the mother, but for the father, it's insignificant. It's just quite interesting, the way they talk about stuff, and the numbers are quite large. Anyway, that's it. Questions.

Nick Lincoln:

Yep, okay. Next point, Hargreaves lands down Ultra I don't know if you want to get involved in this as well, but they are going to de list, and it's this continuing saga of the decline of the UK stock market. As these companies just cannot be asked. They cannot be asked with the regulatory burden the DEI nonsense. I'm sure in Hargreaves lands down website somewhere, there'll be a statement about slavery. Statement about slavery. These companies just cannot be asked. With it just gets pilloried. His is a very successful man who just created millions. And just we look down on entrepreneurs. We look down on wealth creators. Governments arbitrarily raise corporation tax by a third, out of the blue. And I can see why these corporations are just, you know what? Sod this. Sod this. We're not doing it. So, yeah, do you have any views? Couple

Andy Hart:

of points on this. I think Hargreaves are an amazing company. They've opened up investing to hundreds of 1000s, if not millions of people. Yeah, a couple of points. Obviously. PE are very active in buying UK companies because they believe they're undervalued. It's another great company off the FTSE 100 they're highly profitable. The founder, Peter Hargreaves, he's got a decent book called In for a penny. He basically started off this whole DIY, investing in 1981 sending checks in the post. And then old mutual came along, scanty all this stuff. So it's quite an interesting insight as a history of this profession. Hargreaves are, I think, a great and efficient company. I've got an account with them, or account with all of the online companies. For example, if you need to send something to Hargreaves in the post, you get the letter out. Probably said this before you literally write the letter free post, Hargreaves lands down. It gets there everything. I mean, talk about low friction. Yeah, it's the articles that have written about it. We don't quite know what the new entity is going to be. I thought it's going to be the same platform, just maybe tweaks around the edges. The new CEO, Dan Ollie, he's coming and been quite guns blazing. Peter Hargreaves is just dead set on it being DIY, no financial advice. Whereas everyone comes into Hargreaves and go look at all this money like we can make a little more money if you offer advice. But they can't offer advice at scale. So that's the thing. Yeah, do you know what? If the PE company does it, I'd go with

Nick Lincoln:

a man who's made a 780 million quid. I'll go with this judge, yeah, I

Andy Hart:

Oh, he's worth, he's worth billions. I think,

Alan Smith:

I think they're really undervalued. Can you imagine? Again, I have to bring out it as well. Yeah, bring out my old, my regular reference to AI. Imagine the data that an organization like them has got that Hargreaves lands down over the however, many years have been going and all of a sudden they can pinpoint and deliver us highly, highly personalized.

Andy Hart:

They're pretty much in Bristol. Yeah,

Alan Smith:

I think they have their value could be two or three times what their current listed value. And I think, excuse

Nick Lincoln:

me, two seconds guys

Andy Hart:

off to get a package or something. I'm sorry, we can continue without him. Yeah? So,

Alan Smith:

yeah, that's that is interesting. And they're not the, yeah, they're not the only one. There's, there's several listed companies have been, or in the process of being, taking private and private equity guys tend to be pretty smart. Yeah, this is just massively undervalued. We can take this off. Take it private for the listing price, tidy it up a bit, apply a bit more whatever thought. Yes, technology.

Andy Hart:

They've bought it for 50% of their share price peak. Keep it simple. The share picked the 22 pounds a share. Now they're buying it for 11, yeah,

Alan Smith:

but yeah, still. But I guess the current the shareholders have had to vote it. They've accepted it.

Andy Hart:

Can they deliver regulated financial advice, financial planning on a mass scale? That is going to be the big question. I think they're going to be asking themselves, but yeah, but do they need to be less? Do

Alan Smith:

they need to carry on just doing what they're doing. Now, that's what the I mean you're thinking some of that, they are fantastic. The demographics are hugely in their favor. This huge number of people reaching retirement that want to do DIY, or at least partially DIY, want to invest, want to save their tools. I know a lot of advisors. I know you guys do as well. Just use their part of your job as well. Use some of their calculators, some of their tools, yeah,

Andy Hart:

just decent. They start the client in mind. You know, they don't add extra complexity for the sake of it. Even when you need to fill in a new form online, it will pre fill your information and date. You just do a simple, you know, all the other crap platforms will make you print it out 80 pages. Anyway.

Nick Lincoln:

Okay, all. I still with you. Ultra FTSE, 100 pensions, but just calls black B, no, it's not cars. Cars been cut out. Oh, Carl's and that's Carl said to do that, footsie, 100 pension schemes behind a paywa, this quite

Andy Hart:

simple, was an article in the Times. It's just outlining and listing the pension contributions from the foots 100 companies, like, what's the best foot to 100 company work for if you want to build a huge pension, and the discrepancy is enormous, you know, keep it simple. If you work for the worst one, you're gonna have a pot of born to ground. If you work for the best one, you can have a pot of, you know, one and a half, 2 million quid. There's a link in the show notes. It's maybe behind a paywall. The highest pay is a shell 20% non contributory. My brother works one of these companies, and what he told me is, the contributions is not what they've listed. So I don't know how accurate it is anyway, any points on that, I'm assuming not if you really want

Alan Smith:

the best pension contribution, join the public sector. Too.

Andy Hart:

Great. Oh. Final point, just another plug, genuine. Hum, London has only got 15 tickets left, so it will sell out ASAP. So if you're on the fence, no. Bs, buy ticket back to you. Boss, excellent.

Nick Lincoln:

Thanks. Chaps, 46 minutes, not, not too bad. We went through a lot there. Okay, so I think it's time to move on to the meat and potatoes. I've got a fee. I know it's coming. My Media board suddenly went blank on me. I had a mini heart attack. So something called the Japanese yen carry trade has unwound. It's probably even duller than it sounds. As a descriptive don't really understand well, I do understand it. But I mean, anyway, there has been some volatility in the market. As we know, volatility goes both ways. Mainly, it goes upwards most of the time, but sometimes we have downward volatility and over the last couple of weeks, we've had downward volatility, especially in Japan, but then that translated across to here, and then to America and through Europe. And what has amazed me on this is the media response to this volatility. So for the media potatoes, I think we have a two part approach to this. What was the recent small decline, and how was the media reaction to it? And what does that for? Tell us about what's going to happen when we have a proper decline. And the second part will be, what are we doing now? And what should we be doing now to really lay on thick levitamin D and educating our clients. So Ben Carlson, a wealth of uncommon sense, put out a piece last week, and he reminded us all that the typical S P intra year decline is 16% has been for this century, and was for most of the last century, 16% now I think the S P is down around 567, percent, given all the recent movements, because it went down. It went back up again. But the way the media has reacted to this perfectly normal, half the average, typical into your drawdown. It's reacted to it as if it's the end of times. And this got me kind of thinking a bit, because we haven't had a real nasty grizzly bear market since the great financial crisis, whatever you want to call it, the credit crunch. 2000 72,009. We had the Wuhan bed wetting, but that was a month. And for the at the time, we didn't realize it was just a normal flu. I

Andy Hart:

think that's a serious bear. Nick That was very extreme, but I know what you're saying. It wasn't prolonged. Covid is a serious bear. You know, people were seriously panicking, so we were on the front foot. But fine,

Nick Lincoln:

okay, that wasn't not, that's not my experience of it. And we've had some, we've had some we've had some very short bears since 2007 nine, but they've all been 11 months, five months, one month had not been and they've all been 20% to 30% and of course, in 2007 to nine, a device came out. Funny enough, in June of 2007 Steve Jobs saw that Nokia invented the smartphone with a touch screen display, and thought, I have some of that and make it actually decent. And he launched the Apple iPhone in 2007 and back then, nobody had it in the great financial crisis, pretty much nobody, in terms of global population, smartphones just were not a thing. Now, I don't know anybody who hasn't got a smartphone. My son is 22 he's had a smartphone for at least the last decade, and he upgrades every other new issue about Apple. I've just come back from Spain with my parents, 85 and 83 they both had smartphones for as long as I can. So these are, and I'm sure we all know people in our own circles at both ends of life who've got these things. Nobody had these in the last the last serious bear. And I just think when the next bear comes, it's going to be unlike any other bear that any of us have experienced, not in terms of its severity. It could be 30% 40% 50% 70% and not in terms of its length. It could be a year. It could be three or four years. It's going to be the reaction to it. It's going to because we've got these bleeding devices in our pockets with Instagram on and tick tock and x and everything else, and relentless news notifications. Because, judging by how the media reacted to this very recent, totally normal, gentle downward volatility, the next proper bear Mark. Pocket is going to be unlike anything we've ever seen in terms of how the me the media portray. And let's not forget that the media from 2007 is long gone back then, people still actually bought newspapers. Some newspapers actually made money. The legacy media now is just for clicks, right? It just wants you to click and read the banner adverse so they're going to bombard you with bad news as and when it comes. So I just think, I don't know. I was just astounded by the reaction to it recently. I just think if I could when we get, when we get the next bear, it's going to be a massive so the second part of the of this conversation really is okay. We all know that the time to educate your clients is when is when times are good, right? You know the cliche, but you do that, you do the iceberg drill when the boats moored in the harbor, you do the fire evacuation from the tower block. When there's no fire, right? You don't, don't wait till there's a fire and there's smoke and there's everyone panicking and jumping out of windows. It's too late then. So we need to be stepping up our indicate our education, not just the quantity of it, but the quality as well. We need to be on the front foot with this kind of stuff. If, like me, I know, and you might think started with this last significant bear that people remember was the great financial crisis that ended in march 2009 that's 50 over 15 years ago. I'm not saying there's one around the corner. What I'm saying is it's likely that we're probably overdue one. Given that typically, in the last 54 years, there have been 12 bears, we're overdue one. We need to start educating our clients now, being on the front foot and being really aggressive about it, because we, the four of us, know, and most of the Trappists listen to this, know that our value comes from managing our clients behaviors, and now is the time to help educate and manage our clients behaviors, because the next bear will be unlike anything we've ever experienced, not because of the quality of the bear itself, but how the media will just go full on nuts, gents. Any thoughts?

Andy Hart:

Those are great introductions. Anyone want to go or not?

Alan Smith:

You? You go Andy, I think we've all got things to say, but yeah, why are you the next

Andy Hart:

Nick's hit. The main nail on the head, the media need to sell advertising so they're going to be, you know, just headlines coming out of their ears. You know, bear markets are good news for investors who are contributing monthly in their savings stage of life, which is the majority of investors, but that's never reported. You know, bear markets are where the great advisors, you know, stand tall, as Nick mentioned, although the previous vitamin C we've been giving our clients, the coaching during all the live conversations we've had with them. And they need to know the numbers going in the market generally advances 75% of the time and declines about 25% of the time. That's baked in generally, and the minus 15% is happens every year. Pretty much minus 16% has been quoted earlier on, but at least three every three to five years, expect at least double that. We just don't know when it's going to come. So it is also important to discuss these things in the welcome meeting. I think some most important thing to discuss in a welcome meeting is what's going to happen with their that what's happened with investments historically. You know, there's no facts about the future and you know, just drill it into them. I suppose that's it. Who's next?

Alan Smith:

I If you guys have heard of someone called Jonathan Hite,

Andy Hart:

yes, they book out about the anxiety. Book out. I

Alan Smith:

watched him on a podcast last night, and I gotta tell you, it's depressing. So he's a psychologist, a therapist. His focus is teenagers. Girl. He talks about, again, I'm never good at remembering the Gen Z, Gen, this gen, that all the stuff and when people were born at certain times. But I tell you, as parent of teenagers as Carlos and Andy will be. I was just depressed by it because and he just goes through exactly this Nick You alluded to this thing when the iPhone came along, but wasn't just the iPhone. It's when the platforms then understood that it was an advertising model that sort of and so every all the algorithms are designed to keep you on the platform. And what keeps you on the board is, how are human beings? We react to threats and problems and things? If everything in the garden is lovely, we are going to go and do something else we don't need to keep on the platform. So everything you do is doom and gloom and negativity and and all that, that sort of thing. And you're right. When you mentioned this nick the other day about we should have a conversation about thought, Wow, you are right. Because not only are children going through just such an a period of anxiety, and unfortunately, it's coming, you know, teenage suicides, it's just, it's an absolute mess. And I'm also sorry to say that Jonathan Haidt had no good news. He said there is no solution, short of just taking these devices away from people, which is impossible. Well,

Andy Hart:

he's he was not not being allowed a smartphone until you're 14, not being able to sign up 1616, yeah, so not been able to sign up to social media until you tell in your 12 year old

Alan Smith:

daughter, all there for. Friends, so can I?

Nick Lincoln:

Yeah, my wife in here quickly. Sorry. Her school. They've just, they're just bringing it in. They're not, they're not allowing mobile phones into. You can bring the old fashioned dumb phones so you've got the kids, but they banning it from next term, next year. This is the it's gone down very well with the parents who are just crying out. Yeah, I

Carl Widger:

actually heard of a school recently on the outside of the locker. They have a little clear pass, yeah. And your phone has to be in it, right? Yeah. And if your phone isn't in it, your parents are called to say, why isn't Johnny's phone in his pocket, and it's locked so it has to be there for the whole day. So they can't do the

Andy Hart:

problem. They'll probably buy second phone. I'd buy a second phone. I was a little shot like that.

Unknown:

Yeah,

Andy Hart:

I'll be selling phones to the other kids. Yeah,

Alan Smith:

fake, just a fake, but they're all fake phone. Yeah,

Andy Hart:

I remember when my brother banned his little boy from YouTube. My little nephew worked out that you can go on YouTube if you download a keyboard. You know, my brother was like, No, I've locked YouTube down, and he had this special keyboard you can,

Alan Smith:

you know, well, that's the thing. You've got generational differences, but I think the points well made Nick That's all well and good, and it's a freaking slow motion tragedy actually playing out in front of our eyes. And I'm struggling with what to do with it. And most of us have got issues and challenges with the whole thing. I haven't read his book. Actually, I think I'm going to buy his book and and read it. And I probably recommend anyone listening to this. I think he offers some some guidance, some suggestions, something out there, rather than just let the whole thing play out. But you know, this is, this is the point. I mean, as he talks about how, you know, the way the humans operate and bullying in schools and stuff anyway, but apply that to to our our world and dealing with clients. Now, obviously our clients are more mature than that. They're not children by and large, but nevertheless, they are impacted by that, because everyone is on Facebook or Instagram or Twitter or LinkedIn or whatever, the 90% of people spend some time on it all the time, and the platform, everything the platform wants to do is keep you there. So it is a real challenge. And the probably the single biggest thing, the biggest challenge we've got. And maybe you're going to speak about this, I've got a head Carl, you might be want to talk about this, or leave it to you to explain in more detail, the biggest challenge is anticipated timelines. Because it's like, it's like the conversation about gold or whatever people are talking about, literally this, this quarter, this month, or this whatever, versus we are multi decade investor, multi Yes, multi decade intergenerational investors, and that's the mismatch. Yeah, that's the entire thing. We know that over the next 30 years, you know, looking at, looking at 100 years of data, equity is going to outperform gold. But over the last week, quarter, gold may well have outperformed and this is what captures the attention. What are your thoughts? Carl,

Carl Widger:

yeah. So look this little minor, very minor blip happened on Monday, and it was a bank holiday here, which would be very surprising to you guys, but we actually had another bank now on this particular sunshine I had spent, yeah, well, when you hear this, I had spent the Friday, the Saturday and the Sunday night in a tent at a Music Festival, because that's how I roll on a piss train on the Sunday was absolutely pissing rain and the Monday, so was

Nick Lincoln:

it, was it we

Carl Widger:

well? Thank you, Eva for inviting me. I loved it, so I got into the car. I like that drop play, that questioning, questioning, every single life decision I had ever made. And I decided I'd look at the markets, and went, Oh Jesus, Mary and Joseph. So the first thing I say is we have to we have to understand people are in different places at particular points of time, and my anxiety levels rose. So I'm not going to tell anybody that you're stupid or it's ridiculous that you you know you felt anxious because minded now the previous three days probably led to my anxiety levels being raised. Anyway,

Alan Smith:

however, my anxiety,

Carl Widger:

maybe perhaps right, but my second, my second thought then went immediately to Mr. Morgan Stanley, man that I mentioned in the previous episode, who told us all I said, he's going to be on to me. Morgan Stanley, are actually going to be on to me. God, I told you, I told you. But look, that's just, I suppose, try to describe, you know, the range of emotions we're trying to deal with people. But I then, when I did get back to the office and the business post led with an article as follows, market turmoil, six experts. On what happened, what to look out for, and how to adapt your portfolio. And then there's the six, and that was on the seventh of August. Now also being totally honest here, if the business post rang me, or anyone in Medicine said you want to contribute, we would have said, yes. So let's be totally honest here, right? And we would have said, Look, these things happen or whatever, but we would have been part of the article if they asked us, that was the seventh in the business post, a really crack in newspaper on the eighth in the business post, market, rap, S, p5, 100, not just biggest rally since November, 2022 so this proves the point that you know, the papers are looking for sensational headlines. They found two different ones, two totally opposing ones in two consecutive days that would have confused the shit out of every investor. It would admit it was like, should I have gone out? Should I get back in or, you know, so it's these things are. They're just gonna happen. We can't help this, this, this bloody phone in your pocket, right? Because Egypt's like me will sit into a car after a festival and look at the markets, because we're human beings, because that's all we do, right? And so, um, but did we at Metis get any phone calls about, oh my god, right? We didn't. However, do you know what we did get, we got a few with people saying, Will I throw that extra few quid in now, right? So, so I hope we are doing the cost. It is, it is, but, but I take your point totally, Nick, that this is very mild stuff, and if some big stuff happens now, Andy's point about covid being, you know, a big bear. It was my experience, though, as people were more interested in the kickback necessarily, because

Andy Hart:

it was so unique. It still, I still has to have a tick in the bear box, in my opinion. But 100% 100

Carl Widger:

100% but look, I don't think we can do if you're doing real financial planning, if you're doing if you have an investment philosophy that you can stick to, what more can we actually do? I don't know, like, like, what's the answer to all of this? Is actually we spoke about it in Episode 50. So we spoke about what to do in this scenario two weeks prior to this happening. And I don't know what more we can actually do.

Andy Hart:

Something really coming to my mind, it's sort of client screening. I can't think of a better word, because if you do have those nightmare clients that you know going in, they're going to be a nightmare. I mean, it's technically your fault. So I think we're all in a somewhat fortunate position that we can take on clients that we like, we think are going to be well behaved, and we think are going to be teachable. But if you've got clients that are just unteachable on a freaking nightmare, just sending you links and just panicking and, I mean, you know, happy clients, happy business, happy life, that's the order. And if you've got unhappy unhappy business, unhappy life, all those

Alan Smith:

things are, are true. But I really get the sense of this, we it went freaking, exploded for a day or nearly a whole week for nothing. It was, it was a just small blip, the entire thing, and and this, if you get a minus 40% global equity market, ex, you know, experience like we had, yeah, seven, eight, I dread to think, what about and even the most rational, cool headed person, because we didn't consider this, this type of media. It's not just the phones and stuff. It's the type of meat, the way that people consume media that everything in days gone by, when you let us Nick said you bought a newspaper, there was some sober reporting on this. You had like, it's not in the interests of those who create this modern form of media to make you know, to give sober reporting that doesn't keep

Andy Hart:

people on the long term life savings. They just want to sell eyeballs, their interests

Alan Smith:

are completely misaligned.

Andy Hart:

Three minutes, not 30 years exactly. Yeah.

Carl Widger:

But then I think the Nick I fell by 12% was it or something

Unknown:

like that? Yeah. And

Andy Hart:

I found funny about that that though I sent you guys the other day. Is the Nick I the Japanese stock exchange closes for lunch. I just think it's so awesome. It's so traditional. I could just imagine civilized all going for lunch, recourse meal, red wine, and then going back into the tracking floor. Yeah, I'm

Nick Lincoln:

not sure the Japanese are quite so hedonistic as perhaps we are in the West. Belgium ran perfectly. Fine, but that's government. You just don't need, you know, don't just don't go to lunch, go to lunch. For years, everything will be fine. I mean, the MSCI World, which is my preferred index, as opposed to the MSC, you know, that fell in those from the november 2007 to march 2009 peak to trough, decline was 59% Again, incredible when it happens again. It might happen in our lifetime. It's gonna happen. You know, imagine the tsunami of just, just it doesn't bear thinking

Alan Smith:

about. And that's but as I say, this is our clients will be, will be overwhelmed by this volume news and

Andy Hart:

point though, because you're gonna have to be, we're all gonna have to

Alan Smith:

even more on the food than we've ever been before, like and repeating this stuff, and

Andy Hart:

we're gonna have to prepare for it. This is the,

Alan Smith:

I'd say, very, very quick story, very quick experience. They're just really water, they're really quickly because

Unknown:

grab yourself a drink, a very drink. It's story time with Alan Smith,

Alan Smith:

I was advising in the depths of that how you just described it in a 2007 to march. 2009 is when things began to recover. And we were doing real financial planning, and we were building financial forecasts and cash flow modeling. And I remember so that. And of course, the media landscape has changed beyond all recognition, which is the entire point of this, this debate, this conversation. So I'm going to guess. Can't remember exactly when it was around in the D at the bottom by 2008 sometime late 2008 and I remember this lady coming in who was planning to retire. I mean, she was saving a lot of money and doing a mess. And I go, Oh, mother, like, house and fire. She's still a client. Now, I'm pleased to say, and and she just came in and she's, she was just all over the place. I mean, it's such a mess. And so I said, like, calm down. And obviously I'd prepped for in advance, re ran the cash flow from that bottom, you know, in the bottom of the pit of the bear market and but I assume normal growth rates, normal inflation, whatever. And I didn't assume a bounce back. This was going to go back, bounce up again quickly, but from here all the way forward until you anticipate retirement age. And what it said to her on this model was, if nothing recovered quickly, if we just got back to a sort of linear, sort of 3% above inflation, or whatever return you could get, she might have had to defer her retirement by two years. That this was the point. And she really liked working anyway, and she was chronic. And she said, That's it, that kind of and she would we tested the models again, just sorted everything out, and she said, Oh my God, if that's the worst in this, because she was just coming in for this media onslaught back in those days, back in she said, I'm just walking out. She said, you've taken such away off my shoulders. I was just so like, I could never retire. Now, nothing could ever and this is the point about changing the time frame. This is because she's, she still had, you know, anticipate, she lives 200 years old. She was talking about, like a 3035, year time horizon. If you assume that these, even though the market is cratered, you're still going to be, you know, worst case scenario to fair, defer retirement by two years. And I think that's the point we've got to do, is again, go back, you know, zoom out. Remember to zoom out, even in the current circumstances. Quick, quickly, rerun your financial plan, run your model and calm people down.

Nick Lincoln:

Well, point well made. Sorry, Carl, do you want to put you to put your little dog on your lap? I'd like to watch that. I wouldn't see you. You were gonna say something my friend before, before Ultra and Allen had a little back,

Carl Widger:

yeah, I was gonna say that we should all just make our point simultaneously, because I think that makes for a great podcast. No, I look, I think the Nick I going down by 12% that gave the media what they wanted. Like, whoa, this is gonna be massive. And what happens if that happens again tomorrow? And this is the, you know, so it's like, look, it's, I hear what everyone's saying, but I'm just not bloody sure what more we can do other than what we are doing. And I think, as you say, the time to, you know, have those conversations with the clients is at the outset. And we did and listen to episode 50, because we did speak about that. We spoke about the maximum drawdowns. It was 6040, and 8020, and there they are. So, so crucial because, and it's not for the advisor, it's for the client to make sure that the client goes in and stays in.

Nick Lincoln:

This is it. This is it. I think message I would, and I'm sure I know you guys are as well. I think we need to be upping our upping, you know, you might want to have a little online webinar. You know, the next bear is coming. What are we going to do? And you just reiterate, we, actually, we're going to do nothing, right? Just work on that material and get it out there. Now, you know, 12 bear markets is 1954 sorry, 12 bear markets in the last 54 years. And despite that, no because of the bear markets, the MSCI World Index has returned 11.1% annualized. You have to have the bear to have the ball. Now is the time to tell people it'll be too late when the MSCI World has gone down by 30% and Robert Peston and Beth Rigby. Are telling your petrified clients this time it's different, because they'll be selling online. They'll be clicking online and doing it behind your back, despite what you try and tell right? I tell you a

Carl Widger:

good one, just just on that Nick when we started our journey at meadows, we were doing blogs and whatever, and trying to get a bit of traction, and nobody, literally nobody, was looking at them, or we did a webinar, and they, like, six people, five, you know, from metas and my mother probably, I wrote a blog then, and I said, the stock market has crashed. What to do now, right? And it was, like, just kind of tongue in cheek, and I got, like, Absolutely, tons of engagement. So, you know, people do, you know, they click on, that's just proof. Again, they click on the links. You know, it's not a bad idea. You know, do a webinar with you know, you know, call it out. You know. How do you feel reading that headline? And let's talk that through. Let's talk, talk the anxiety through. Anyway. Sorry, yeah. I mean, you might, just

Nick Lincoln:

might want to frame it. You know, dear client, over the last few weeks, you might have thought they've been going through, we've been going through, we've been going through a really bad bear market. We haven't been, let's just talk about what a really bad bear market looks like, because there's one coming down the line. Yeah, you know, catching that. But that would be that, that would be, generally the tone perhaps I would look to, Okay, listen, we're at one hour 11 minutes. We didn't do a Trappist question last week because we were going so long. So let's do, let's do duty to our beloved audience and have a Trappist question, because I can see at the front door there is postie dragging, dragging the bulging sack of TRAPPIST questions. You know, you can submit questions, dear TRAPPIST by clicking on the link in the pinned X at the top of the trap timeline, on X, also in the circle show notes, there's a recurring link for you to submit your questions in there. So that's all good and well, let's dig out a letter and see who this one is from. This one is from, okay, this is from Jill Turner. Jill is on Twitter at joined up Jill. She's also on LinkedIn. Jill's question for the trap pack. So many videos about mouse traps still, I have subscribed now, so she'll be able to find you easily from now on. I have a question for Alan and all of you really on the back of his story about obsr fund research, picking and swapping out funds at the bottom, etc. How did you handle the process of migrating your clients away from this fund picking and quarterly review model? You recount how you talk to clients through gritted teeth, and I appreciate that when working for an employer, the advice is dictated by the employer. But how did you go back to your clients with an improved solution, after all your research and effectively say it's still me, but now I know better. I think this will resonate with advisors who have left restricted networks and now realize they can improve upon the advice they gave enjoying your podcast, especially when I'm cooking dinner for everyone or going on my walks yours. Jill, thank you. That was a very, very good short story. Julie, sort of kept me in tone. It had a beginning, middle and end, and it had a good theme. Alan, do you wanna go first?

Alan Smith:

Yeah, for those who hadn't heard before, when I first started, we outsourced our investment fund selection and solutions to a an organization called Old Broad Street research obser. I don't think they exist anymore. They were bought by someone else, and it was quite a good story to tell. And whether, you know, without going through the whole thing in in the aforementioned global financial crisis, 2000 70,009 they were as much as much use as a chocolate teapot. It was pretty it was a pretty hopeless experience, quite frankly. And we, and my colleagues and I and we sort of looked at this, looked at this, and we thought, there must be a better solution. We spoke to various people. We built our own investment models from scratch, which were predominantly low cost index funds, global, global allocation, etc. But to answer Jill's question, I've then got to go with our existing clients and say we're gonna change. We're gonna we're gonna change, yeah, but if you just did it all, done thing, we it wasn't as if we were moving from, you know, selling, recommending hedge funds and gold or anything else. It was broadly. It was a so called asset allocation model. So two things, two practical things. One I said in all the conversations was it's 80 90% the same in as much as the variability in your future expected return is going to be largely determined by your asset mix. Equities tend to outperform bonds, but they're more volatile. All that is the same. Everything's the same. Not much difference. We're just being more efficient. Is what I said. The other thing that we said as well, and I just got into this habit of saying to people, particularly those who were still working asked, you know, whatever profession they were in? Let's just say they were in the I don't know, the legal profession. I say has technology changed a lot in your profession in the last decade or so? And whoever you go, maybe that's a bad example. But for most other people, they would say, oh, beyond all recognition. And so. Say it's exactly the same in investment and financial services, there's a lot of innovation, there's a lot of change going on in the last decade. It is our I see it as our role and our responsibility to identify trends, opportunities, lower costs, but all that sort of stuff, and bring them to you. I didn't do it as a fatal company like this is what you're doing now. I said this is what we believe to be the better, a better solution, but it's 80 90% the same philosophy. We're just being smarter in terms of the implementation and in terms of the practical. We did it one client at a time. We didn't know. We never did a massive sort of fun switch or anything ever just meeting. We had a great set of collateral slide decks, presentations, all that sort of stuff. And he explained it all. And I have to say the final thing was, when you can, you're just discussing and debating the whole thing, and then you come up with, by the way, it's half the cost that you're currently paying. I was gonna say, is that, all right, half the cost? Yeah, if you, if you just told me that the beginning, and I just signed there. But I think that's the point. It's not much change is what we're seeing would just be more efficient. Is Canada the thought process? Alfred,

Unknown:

I'm

Andy Hart:

going to sort of answer this from a wider point of view, because as advisors, we all go through a journey. We start off at a certain firm, doing it in a certain way, and then we move to another firm, doing it another way. Then we may be certain running. We change all the time. I wouldn't oversell change to clients. Because if you're doing a slight tweak or change, and you're sort of really trying to pitch it and going through sort of five or 10 different things, you know, I wouldn't oversell change. And also you just say to clients, you know, as time has gone on, my understanding slightly changed here, and I think there's a slightly better or different solution for you now. So yeah, the wider issue is, don't oversell change and just explain to them. So clearly your thoughts and understanding of change, hence your advice now has changed. So yeah, Carl voice, anything?

Carl Widger:

Just a quick one, I would definitely start the change with your new clients. Get into your rhythm, your cadence, understand kind of how to frame things, and then maybe bring clients and yeah, other than that, I'd like to thank, thank Jill for sending that question into Alan, yeah,

Nick Lincoln:

well, it was yes. I will close this. I think it's one of those things that's probably bigger in our heads. You make more of it than that. We actually do, and we've said this before, but clients, because it's you saying it, Jill, they will believe you're right. They don't understand half of what we talk about. And the moment you go from saying, Oh, we're going to go passive and small cat, they're already dozing off mentally, yeah, they'll just do whatever they whatever you tell them, because it's you doing it. And I think the problem often lies in our heads. When the facts change, I change my mind. I think you it's how I'm investing my money. Sign the form and get the hell out of my office. Okay, culture corner, come on. Let's do it one hour, 17 kill me. Okay, I'm going first today. So I've just finished a book called Tuesdays with Maury. Maury Schwartz was a professor at Brandeis University in the 50s, 60s and 70s, and one of those beloved professors, apparently, his students just really liked him. They kept in contact with him after they graduated. He was this, this sage. He taught sociology. But despite that, he seems like quite a decent Cove. Anyway, in the mid, early 90s, he contracted this horrible disease called, what's it called, I can't remember the name, Amy otropic, amiotropic lateral sclerosis, als also known as Lou Gehrig's disease, which it was contracted by this American baseball player who got it and died. And it's a muscle wasting disease. And you just basically, your body just kind of just withers and eats itself. When it hits the lungs, it's all over. You just lose fat. You can't you can't walk, you can't feed yourself. You can't wipe your bum by the end, your brain's still there. But everything else is just pretty much going so Tuesdays with Maurice. This is this guy. This this ex student of Maurice, who who got in contact with him when he saw that Murray was not in a good, good way. And Murray was based in Boston, and every week this this guy would this journalist would fly from Detroit to Boston to interview him, and it's just full of really nice sage. It's a sad decline because Maury knows he's dying, but there's stuff in there that we can you know, we work at this intersection of money and fine and money and feelings and values and dreams, and there's some good so I'm gonna read two, two bits out here. So Mitch was the name of the journalist. Mitch, if you're trying to show off for people at the top, forget it. They will look down at you anyhow. And if you're trying to show off the people at the bottom, forget it. They will only envy you. Status will get you nowhere. And which I think is lovely. And that's all part of the hedonic treadmill. I use the hedonic treadmill recently with a with a new with a new client. Couple, really busy, high earning couple, but they're just spending money like anything. She's a senior. She's a partner now at one of the big four accountancy firms. And you know, when you become a partner, your earnings pretty much compound about 15% per annum, until you're not a partner. And he works for one of the big management consultancy firms. They're spending money. And I said to her, you know, this is the hedge on treadmill is buying things you don't need with money you don't have to impress people who don't like and. She quoted that back to me verbatim at our follow up meeting. It made us an impact on her. And this, this book, is kind of full of these kind of things. And there's one slightly longer quote I'll quickly finish within this, Maurice said, Here's what I mean about building your own little subculture. I don't mean you disregard every rule of your community. I don't go around naked, for example, I don't run through red lights, the little things I can obey, but the big things, how we think, what we value, those you must choose yourself. You can't let anyone or any society determine those for you. Take my condition, the things I'm supposed to be embarrassed about now, not being able to walk, not being able to wipe my ass, waking up someone who's wanting to cry. There is nothing innately embarrassing or shaming about them. It's the same for women not being thin enough or men not being rich enough. It's just what our culture would have you believe. Don't believe it. So choose those with more really easy read, really well read, written. I would recommend that for anyone in this thing of ours, who's next

Andy Hart:

is it an easy read? Nick it sounds pretty heavy going.

Nick Lincoln:

He's really the guy's funny. He's just joyful, and he turns he knows he's dying, right? He knows he's coming down the track. I mean, we know, we all know we're done, but this guy knows I am dying in the next few months. But

Alan Smith:

it is, all right, a while ago, it is an easy read, and he's got that same author's got another couple of books of the same. You've

Andy Hart:

been to Tenerife. Alan Smith's been to 11 or eight, all right? Mitch okay, I've

Carl Widger:

just, I've just bought it on Audible and Mitch alborn narrates it as well, which is the Kindle

Nick Lincoln:

version, which I think was going for 199 so, but really good, really good. And it's actually quite uplifting. It sounds depressing. It's quite uplifting. It's probably more uplifting than Jonathan Haidt and latest Opus, right? Who's next?

Andy Hart:

Me? I'm channeling my inner. Watch here. It's a high performance podcast. I dabble in it. It's the notorious chef Gordon Ramsay. It's brilliant, absolutely brilliant. Definitely watch it. You know, he's in Search of Excellence, seeking excellence. Okay? Amazing. Stars goes talks about, you know, history, his family work in London. Just amazing. Absolutely amazing. Absolutely amazing. Yeah, check it out. Gordon Ramsay,

Nick Lincoln:

great stuff. Thank you.

Unknown:

Go on.

Alan Smith:

The book that I'm going to recommend is one of the most profound books I've read in a very long time. It's called the pardon the

Nick Lincoln:

lady bird book of coloring in gone. So

Alan Smith:

it's called the price of tomorrow, and it's a guy called Jeff booth. It's quite a quick read. It's really, really impactful, and it will get you thinking it is relevant to the work that we do. Jeff booth is a Canadian entrepreneur. He's built and scaled multi 100 million dollar businesses, but he's really understood the kind of global economics situation just just the headline I give you now, I've obviously referred to inflation in the past before. Don't you think, with all the with technology as it exists, is deflationary, isn't it? Does it cost more today to, let's say, get a pint of milk to the supermarket than it did 10 years ago, 400 years ago, it costs less. Almost everything should cost less because of technology, and yet we have inflation. Why do we have inflation in the world of modern technology? And his point being worried we're on the cusp of

Andy Hart:

the labor, sorry, cost of labor, the cost of

Nick Lincoln:

the cost. Why Fiat? Fiat money, the ability to print money. Bottom

Alan Smith:

line is, fiat money, the ability to print unlimited amounts of money. And he goes into it, he explains it in in I would say, layman's terms. And I think any of us you know not. This is not an advert for Bitcoin or anything, but to get your head around this idea of runaway inflation compounding up forever in a world of the technology is only getting faster and faster the changes of the next 10 years. You know, you ain't seen nothing yet, kind of thing. And I just say, I just, I feel more informed. I've watched a couple of his YouTube videos ever since then. I recommend anyone working in financial services reads that book. It's It was excellent. That's it. Could

Andy Hart:

you read it on and out of interest,

Alan Smith:

I did read it. No, sorry, I didn't. I bought it. My dad actually gave, sent Give it to me physical I've got the hard copy version.

Carl Widger:

Yeah, I've just bought it on Audible. For those of you who can't read like me, Carl

Nick Lincoln:

is busy keeping the audible Empire guy interesting. I mean, this whole, this whole isn't scary, was caused by inflation, wasn't it? Because the Japanese inflation rate hit the highest for 40 years. So they were going to raise their base rate, their highest rate for 40 years, 4% 4% we die for that as an average over here. Wouldn't we? Okay? The final the final culture corner is from

Carl Widger:

that Chimp Paradox by Steve Peters. I think his name is, you. It, hmm, if you want to try and understand your own psychology a little bit better. This is a great read. I found some of it challenging, which, which might be good, might not, but it definitely got me thinking very, very deep stuff. The whole premise is that you've kind of got three brains going on at one time. You've got the computer, which is almost your autopilot, you've got the human, which is the, you know, logical, rational brain, and then you've got your chimp. So that's why it's called the Chimp Paradox. And the chimp is the emotional, you know, one. And the chimp mind works much more quickly than the human mind. I would recommend it. I really enjoyed the first two thirds of it because I felt I learned lots, and I was challenged by the final third. Yeah,

Andy Hart:

I couldn't go through it.

Nick Lincoln:

Yeah, he's a very good if you had to speak card, he's speaking at the CISA, I think in Manchester. He spoke last I heard, I would

Carl Widger:

say, like the book is, is again, audible for me, nearly 10 hours. And I think it would probably have been a little bit more impactful if it was six hours. I think there was a bit of repetition. But hey, I from the human mind, from you, if you're in our business, you're dealing with people, it's good from that point of view. I'm trying to, you know, learn and grow myself. And I found it really good from that it's but, but tough. Some was

Nick Lincoln:

tough. Some interesting. You said that I do find with a lot of these kind of books, I love them. For the first two, I think if you guys find this, yeah, the last third record seems like this is now getting really hard and could have been edited way better. And I just kind of look,

Alan Smith:

yeah, so they've usually got one or two good ideas. Yeah, good point. There's a lot of over and over again. Morgan Housel says that most books should be a blog post, so most blog posts should be a tweet, you know, mostly just, they just expand more and more and say the same thing in 100 different ways. Yeah,

Nick Lincoln:

okay, cool, right? That

Carl Widger:

book, there was a very short link, remember? But I can't remember what it was, but was like they were saying that this won't ever work, because people won't value it as a book, because it's way too short, yeah, so it's a little bit like music, like they you know, you don't hear the two and a half minute songs anymore, like we used to, because it needs to be a certain format, because the human brain has been trained. This is giving me value or not, so maybe, maybe that's it. Anyway, I thought it was probably my number one book this year, even though I felt it challenging, but that's because it challenged me.

Nick Lincoln:

Yeah. Okay, interesting. Thank you. Carl, okay. TRAPPIST, trap pack. We are at just about 90 minutes. We're flagging. We're slowly melting away in in the UK card is slowly putting on extra layers in Limerick, that's a wrap. A true story, that's a wrap. It's amazing. The difference in where they just go up over the Irish that's a wrap for this episode. Dear Travis, thank you for your precious time and your input into this show. Please do like and subscribe to us on YouTube. We're not a million miles away from 900 saps now, sorry, devoted viewers on YouTube, so please do click that little bell and do give six out of five star review on iTunes for the podcast itself. And make sure you subscribe on that because then every other Thursday, a fresh episode where we'll just slide down into the pan and be on your phone, freshly cooked, freshly baked, whatever you want to call it, but until the next time, dear TRAPPIST, that's a wrap. Take care out there, and we'll see you on the other side. Goodbye, goodbye.

Carl Widger:

See ya. Everybody. Bye.

Unknown:

All right. You.

People on this episode

Head Shot

Nick Lincoln

Host
Head Shot

Alan Smith

Co-host
Head Shot

Andy Hart

Co-host
Head Shot

Carl Widger

Co-host

Podcasts we love

Check out these other fine podcasts recommended by us, not an algorithm.

Maven Money Personal Finance Podcast Artwork

Maven Money Personal Finance Podcast

Andy Hart: Personal Finance Expert, Financial Planner, Financial Adviser, F